Duncan Wierman’s Blog

The cycle has come back around again; there is a resurgence of interest in real estate investment roughly every 10-15 years and the craze is once again underway. Along with rising public interest in the investment opportunities available in real estate, there are the inevitable frauds, hucksters and other assorted parasites who come out of the woodwork to make money at the expense of gullible consumers.

Am I being fair to the latest generation of self styled real estate gurus? I’ll let you make the call. However, it’s apparent to anyone who has any real world experience in real estate investment that these so called experts are often anything when it comes to real estate, though many are undeniably skilled marketers. Would you prefer to make a real estate deal with an actual real estate broker/guru/mentor who knows the industry or a marketer just moving in on real estate in the hopes of making some money off of new investors? Again, I’ll let you decide.

The first thing that any investor needs to look at is the way that these real estate gurus get their message across. What you’ll see a lot of from these real estate investment “experts” is flashy websites, ( tho some have not even bothered to or run spell check before sending out emails or uploading site content) and above all, a lot of hype.

You’ve seen these marketing emails and websites before; they probably look more than a little familiar and it’s for good reason. Replace the words “real estate” with “Google money making machine” or “make millions working from home” or any other online marketing scam that’s going around at the moment and you’ll notice that their content is basically identical. Right down to the stock photos of people standing by yachts, limousines or palatial homes, these sites are like those run by scammers of any stripe, which should raise a red flag immediately. If you’re being offered something which seems too good to be true, it most certainly is.

OK. I haven’t been entirely fair to these self appointed real estate investment geniuses. While the vast majority of them haven’t made any money in real estate (or possibly in much of anything else), there are some who do have some useful information on the market to share – for a price of course. The problem here is that even those flashy real estate marketers who do know a little something about property investment aren’t offering anything which isn’t already available for free or for a much lower price then they’re asking.

What these new real estate gurus are really out to do is separate gullible would be investors from their hard earned savings. Let’s be honest here. They’re not interested in making you rich or even interested in you as a person; though they are keenly interested in your wallet. While I wouldn’t tell anyone not to make a living and as a long time real estate broker myself, I can attest to the fact that there is plenty of money to be made in real estate, these “gurus” are motivated by greed and greed alone.

What can you expect if you decide to pay these experts for their books, seminars or real estate marketing systems? Not much, as it happens. You definitely shouldn’t expect any kind of customer support, you shouldn’t expect any information which isn’t available elsewhere for free, you shouldn’t expect your results to be anything like what you’re promised and above all, you definitely can’t expect to get your money back, no matter what.

What you can expect is to lose out on whatever you pay these people, to get information which is often worthless and quite often, to end up on a large number of mailing lists which will keep your inbox stocked with enough spam to put Hormel to shame. There are people out there who will try to sell you what they claim is exclusive real estate investment secrets that will make you wealthy instantly (and again, let me tell you that there is no such thing, no matter what they may tell you); but they really make their money by selling their mailing lists to their fellow scammers and fly by night internet marketers.

If you’re looking for sound advice on real estate investment, I’d advice looking elsewhere. There are plenty of quality sources of information on the property investment market – but that’s not what these people are offering you. You can learn much more by visiting your local library (for free, I might add) or better still, by talking to an actual real estate professional; and one thing you’ll notice is that reputable brokers never use these bling-laden websites and shoddy, multilevel marketing-style sales letters. Real estate investment – REAL property investment just doesn’t work that way. It’s not a get rich quick scheme, but no business worth getting into is.

Think before you pay any of these gurus for anything or even give them your contact information. Genuinely useful information is out there and you don’t need to pay thousands for on a dubious webinar or seminar to get your hands on it. It seems obvious enough, but let me just leave you with two words about the latest batch of real estate gurus: caveat emptor.

Where do you want to be? On the first page of Google results of course; it’s where everyone with a website wants to be, especially if their website is part of their business. There are a lot of search engine optimization firms out there, with new ones popping up out of the woodwork daily in order to meet the growing demand for SEO services.

Naturally, real estate investment is like every other economic sector in that investors and brokers are taking to the web in the attempt to increase their visibility and to gain a larger share of the market. If you’re in the real estate business yourself, you almost certainly have a website by now – and you probably receive a lot of come-ons by SEO companies who are trying to convince you that they’ll be able to get your website into the coveted top spot in Google’s search results.

Before you pull out your wallet in response to their pitches, think for a minute. There are so many of these firms out there and a lot of them make these kinds of promises. Obviously, they can’t all be right and the vast majority of them can’t deliver any kind of results, let alone what they claim.

Before we go any further, I’d like to offer this little nugget of advice: don’t do business with anyone who promises you a spot on the first page of Google’s search results, especially if they tell you that they can get your website into the #1 spot.

Why? Because no one can guarantee this with 100% certainty; search engine optimization is not an exact science, since the algorithms used by Google and other search engines are closely guarded trade secrets and are constantly evolving. What this means is that what worked to improve a website’s page ranking six months ago won’t necessarily work today. This is why no reputable SEO firm will make these kinds of promises; but of course, there are a lot of SEO firms and consultants out there who are anything but reputable businesses.

But what about the proof these SEO “experts” offer you to demonstrate that they can really get your site into the top spot on Google? Let’s look at the kind of keywords they tell you can get you onto the first page of Google results.

The search terms which these SEO consultants and companies tell you they can get you top rankings for tend to be what are known as long tail keywords; these are essentially what they sound like. For example, something like “stop foreclosure fort myers” – and yes, there is a real estate broker whose website ranks #1 for this keyword.

You might also see companies or consultants making promises about Google rankings for phrases like: “Chicago discount home” or “Sell my house in Dallas”. Number one rankings for keywords like these can be valuable, though more often than not the SEO firms who promise you top rankings for a certain phrase can do so for a very simple reason: there is no competition for these phrases.

Isn’t it a good thing to have little to no competition? You might well ask this; on the web, it isn’t always good to have no competition, since no competition for a keyword means that no one is searching for this phrase. It doesn’t matter if you’re #1 for a given search term if no one is ever going to use this keyword in a Google search, since no one is going to find you. It’s always a good idea to do some research on any search term that a SEO company or consultant tells you is going to secure you the top ranking – you can use free tools (Google has one in fact) to find out if anyone is actually looking for this phrase on the web. In any case, you should avoid SEO firms who make promises like this.

People don’t all search for the same thing using the same keywords; everyone brings their own approach to Google or any search engine. There are trends in online behavior that you can count on to some degree, but again, there are no guarantees when it comes to search engine optimization, at least if you’re being honest about how the web works.

So what really will work to give your real estate investment business a higher profile online? You should pay attention to SEO, absolutely; but you should work with SEO consultants who have a good reputation and an established track record of getting results for their clients. What you should hear from these companies is that they can help your page ranking improve over time, not that they can instantly get you on to the first page of results; it just doesn’t work that way in real life.

Search engine optimization is a process, not a product – it takes time for a website to work its way up the ranks and you will have to be patient, at least if you want real, lasting results. Beware of anyone who tries to tell you otherwise: and there are a lot of people who will do exactly that these days. There are multi-level marketing schemes (or scams, as I would term them) which are predicated on selling people a pre-made SEO business; generally the people who have fallen for this are the ones trying to sell you on a package of SEO services which they promise will get allow your business to instantly dominate your market. Don’t believe them – it’s just not as simple as all that.

For a free 50 page analysis of your website:  www.Web4Service.com

OR Subtitle: Is Using Aegis JV Partnership Funds a Good Deal?

Real estate investing can be very easy when you have money lined up to invest with. Individuals with the aptitude to find and analyze deals and use private money stand to gain huge profits as they flip houses strategically.

The Questions you have to ask yourself are,

• What is the deal’s value in comparison to the funds?
• What amount of profit can I make?
• How do you fulfill investing obligations proceeding the deal?
• How much is the funding really worth?

All of these questions deserve relevant answers that include identifying pitfalls of venture capital partnering, advantages of using private money from investors and while increasing profits while reducing risks.

Loss of Profits with Partners

Venture capitalists firms expect high fees or returns or both on your deals.  By offering such high fees, you are placing your investment in a tight spot to squeeze profits. In the end, you begin to lose profits as the loan goes over a very short period of time ie. (90 days).  Venture capital firms expect profits whether you receive a return on your work or not.

The numbers speak volumes in relation to funding using a combination of the following:

Bank Loans            8-12% (depends on credit score) Down payment/monthly payments

Hard Money Lenders    5-10-15% and points of 2 to 3% and monthly payments then repay in 90 days or pay more points.

When borrowing money for renovations, the borrower typically has to start the renovation process with their own money and then the lender will lend the money in increments as the renovation progresses.

Private Money     6-10%, no points/flexible terms

Property – $98,000 + Renovations – $5,000 = $103,000 (Total Estimated Cost)

Bank Loan – $110,300 at 8.7% over 30 years-fixed = $119,896.10 (true value)

The monthly payment for your bank loan equals $806.00. To some, this is an amazing opportunity due to their good credit, but what about the potential advantages of borrowing from private investors? The bank loan’s amount may be cut in half if used correctly by issuing an opportunity to three stockholders a private lender  in a property. In fact, what happens when you have bad credit? Your numbers are slightly different:

Credit Cards           17-18%

Bank Loans             10-12%  Down payment/monthly payments

Venture Capitalist     10-15% and points of 2 to 3% and monthly payments then repay in 90 days or pay more points.  When borrowing money for renovations, the borrower typically has to start the renovation process with their own money and then the lender will lend the money in increments as the renovation progresses.

Private Money     6-10%, no points/flexible terms

Example:

Property – $98,000 + Renovations – $5,000 = $103,000 (TEC)

Bank Loan – $110,300 at 11% over 30 years-fixed = $122,433 (TV)

If this is your first or 50th investment opportunity, it may suit your needs to find private lending partners within your professional network to finance a deal before it is too late.  Stretch your knowledge base by reaching out to individuals whom you are comfortable working with on financing your deals. Nontraditional funding opportunities may be a call away or a meeting from you acquiring your first property.

Nontraditional Funding Opportunities

Private moneylenders are there to help you in the midst of trouble. They are understanding, expect little in return, and are ready to go through the hard times.  Private money opportunities exists everywhere in your reach; the access to investors or everyday people willing to put their money in your hands is the beginning of an evolving partnership with little strings. All you have to do is make a plan in how to attract private lenders, also known as angel investors whom are willing to give you the leading role while providing funds for the real estate venture.

Finding Private Money

Real estate investors lurk are available within real estate investor organizations, doctors, lawyers, IT professionals, and other professionals with slow investment plans providing little return. Your introduction to passive real estate investing is only an option, but if you present it rightcorrectly – it can become their solution to building wealth. Work your circle of influence in a strategic manner – start with family and friends then branch out into investor organizations within your city. You will notice that a number of candidates exists outside of your comfort zone. Some of the other people available are friends of friends, your personal banker, consultants, colleagues and anyone with a retirement plan.  Always ask for referrals!

Creative Borrowing Techniques

Certain private moneylenders will face cancellation or early withdrawal fees from using their IRA and 401K. Consider offering an incentive for this fee by paying their withdrawal fees with their first returns on the property. This presents a sense of gratitude and commitment to their investment.  In addition, offer to pay their annual maintenance fee on an IRA for the money they lend you.  On

$1 million dollars the fee is less than $2,000.  Setup your own self-directed IRA with a company like Equity Trust so you are familiar with the process and you can say with confidence that your IRA is self-directed.  Working with Equity Trust Company will give you huge credibility.

Equal Interest Exchanges

Organize the investing process to help improve success. For instance, if investors request a 5% return on their $20,000 loan offer them 2.5% of ownership in the property. The $20,000 of their loan compensates the purchase and allows potential expansion of their funds in other areas in the deal. Split the interest of the loan in half to give investors a say in the upgrades or improvements of the home overtime. This can develop into a profitable partnership if done correctly.

Develop a SWOT Analysis

What does an investor want to know? How fast will you be able to make money off the property. Add a SWOT analysis in your presentation (or discussion) of a real estate deal. Establishing confidence in investors means describing numbers, level of success, and the steps of how their funding will help increase profits of a property. Contrary to popular belief, numbers speak. Numbers provide confidence and a peace of mind for investors. It is your responsibility to establish a strong network of investors, purchasers, and increase likelihood of success by automating your real estate investing practices.

Work The Numbers

A friend offers to loan $20,000 towards a $110,000 purchase. Their equity in the home is approximately 5.5%. You ask the friend to pay 3% on the loan in exchange for complete control over the project. Now, your total expense to the friend is $20,600 (only $600) for acquiring the loan. You offer to pay a monthly payment of $115 per month over the next 15 years. To your investor, this is a continuous stream of income just for giving the starting money in the deal. To you, this is an amazing opportunity to own your own property to flip.

Now, let’s say you renovate and sell the property for $136,000. The profit is $26,000, which covers the first loan to your friend. Secondly, you decide to pay larger sums in monthly payments in order to give your friend their loan back in 10 years. You now have the power to pay the full loan back with a remaining $5,400 profit towards another property or keep the profits to use as monthly payments for 10 years. At this point of private money, you are in control of everything.

Compare to Venture Capital Firms.

When comparing Private Money to a company such as “Aegis Equity Capital Partner Program”  the differences are vast and in favor of Private Money.  The power of Private Money is most obvious when you’re able to not only acquire the property, but you have the capital available to do the renovation if one is needed.  By utilizing Private Money you will almost always receive a check at closing which is tax-deferred capital available for you to handle marketing expenses, holding costs and money to pay yourself as you run your business.  In addition, you have the opportunity to be very creative with the rates and terms for your private lenders.  You can pay them 6-9% and negotiate payment terms that are monthly, quarterly, semi-annually or annually.  Don’t you love it?  You are in control.

Example:  On a $200,000 ARV (after repaired value)

Private Lender @ 80% LTV = $160,000 loaned

Acquisition Cost    -  $114,000

Renovation Cost     -  $ 28,000

Cash at Closing = $ 18,000 (to handle marketing expenses, holding costs and to pay yourself

2-5 year term with no prepayment penalty with Private Lender

Pay Private Lender 8% APR Fixed on $160,000 = $12,800 divided by 12 months=$1,067….. Keep in rental portfolio and rent for $1,275/month while you earn $200/month cash flow and are in a position to ultimately OWNER FINANCE for $210,000 and turn the renter into a buyer.  Request a $20,000 down payment and owner finance for 36 months and have them refinance with a bank.

Or sell when renovation is completed for $195,000 and earn another $35,000.

First and foremost with Aegis the fees paid to them are outrageous.  The whole idea of investing in real estate is to be in control, have fun and make money. The only people in control, having fun and making money with the Aegis program is Aegis.  They are in the “Driver’s Seat”, not you the borrower.  They set the terms and the rates and you pay the fees and accommodate them.

Special Note:  When borrowing money very seldom should you borrow for the short term 30-90-120 days.  Real estate renovations and marketing take time and before you know it, you’ll burn through the short window of time.  Partnering with Aegis or anyone to ultimately give them 10-20% of the profit or $8,000-$18,000 on the deal, whichever is greater and for 95+ days of access to capital is not a good business strategy.

The ideal time frame to borrow money with private lenders is 12-24 months with no prepayment penalty.  Finish one project and ask the Private Lender permission to keep paying them a great rate of return on their passive investment by moving their money to another property and restart the process.

The two most powerful words in Real Estate are “PRIVATE MONEY”.

Look at what one of the top Realtors has to say in response to The Aegis Equity Joint Venture that Nathan Jurewicz and Chris McGlaughlin promote

Thank you.

Duncan Wierman and Gary Brevko

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